Traders push stocks higher Thursday on gains in overseas markets. There seems to be a growing feeling that the worst if over for stocks and that a bottom has formed. Of course, tomorrow's employment data could have an impact on these thoughts, but the fear that arose after last week's selling has lifted.
Jobless claims data was a positive today, falling by 10,000 to a level of 328,000. However, the four-week moving average continued to move higher, reaching a 17-month high of 339,000. Analysts are calling for gains of about 100,000 nonfarm payrolls in February. This below the average of 155,000 the past four months, so if the data is substantially weaker than this, recession fears could reemerge. In a related report, the Monster Employment Index jumped sharply during the month to 177 from 168 in January.
Retailers are in the news Thursday following the release of same-store sales numbers. Wal-Mart (WMT) disappointed by announcing gains of less than one percent in this metrics. However, like many retailers, the company was hurt by the slowing in housing. Though same-store sales were mostly flat in February, many retailers said things picked up late in the month when weather calmed, which points to strength in the spring.
The stocks seeing the strongest gains in the sector included Aeropostale (ARO), up more than five percent; Federated Department Stores (FD), up nearly three percent and Target (TGT), also up about three percent. Despite low sales during the month, WMT shares are trading flat on the session. Overall, the S&P Retail Index ($RLX) is up a solid 1.65 percent in midday action.
It's actually a little surprising that stocks are seeing such large gains ahead of the employment report on Friday. However, it seems the bulls see oversold conditions and that talk of a recession is overdone. Nonetheless, all it would take is a disappointing jobs report and a further drop in the dollar against the yen for the "R" word to return. Even so, most Fed leaders continue to state that the economy is in good shape and that despite problems with the sub-prime lending sector; it seems the housing market could be starting to stabilize.
Besides the employment report tomorrow, traders will get data on International Trade and Wholesale Trade. Several Fed leaders also are scheduled to speak, so we could see a busy trading day to end the week.
Senior Staff Writer & Options Strategist
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